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Looks like we’re going back to “BUYER BEWARE”
Last February, after three years of discussion with the Canadian Real Estate Association (CREA), the Competition Bureau filed an application with the Competition Tribunal seeking to strike down CREA's rules regarding the MLS®, which it said restricted the ability to conduct real estate transactions without an agent.
The Competition Bureau wants for consumers to be able to pick and choose the services they want from a real estate agent. CREA has always been of the view that its rules regarding member board MLS systems do not in any way prevent or restrict a broad range of business models- there has never been a “fixed” rate for real estate services.
The Competition Bureau said it should be possible for Sellers to advertise their property on MLS® without having to use the other services provided by a Realtor®. Sellers would be able to hire an agent to put for-sale properties on the Multiple Listing Service® for a fee and if they wish, the sellers could carry out the remainder of the sales process themselves, thereby saving costs.
CREA challenged the Bureau, arguing that MLS® and Multiple Listing Service® trade marks were their property and assets. Under CREA’s rules, as the sole owner of the trade marks, CREA said they had both the right and the obligation to ensure compliance with the conditions governing the use of the MLS® trademarks.
CREA argued, also, that Canadian consumers have relied on the MLS® trade marks for generations as signifying highly professional and ethical real estate services. REALTORS® in Canada have spent hundreds of millions of dollars advertising their services in association with the MLS® trademarks. CREA has always been of the view that its rules regarding member board MLS® systems do not in any way prevent or restrict a broad range of business models.
The Multiple Listing Service® has been a valuable real estate tool in Canada for more than fifty years. There have always been three “pillars” or basic requirements for a listing to qualify for inclusion on a real estate Board’s Multiple Listing Service®. It is CREA’s view that consumers and REALTORS® both benefit from these basic features of MLS®.
The three existing requirements or “pillars” for a listing to qualify for the Multiple Listing Service include some offer of compensation between REALTORS®; continuous agency relationship during the term of the MLS® listing; and accuracy of information. If a listing goes into the Multiple Listing Service®, a member REALTOR® is required to verify the accuracy of information in the listing.
This week, it was announced that Canada's competition watchdog and the Canadian Real Estate Association have come to a compromise... they’ve got an agreement “in principle”. The terms of the agreement that will be presented to the 90,000 CREA members for ratification at the annual meeting in St. John's on Oct. 24. If ratified, the agreement will be filed with the tribunal and its terms will become binding for a ten year period. A bureau spokesman said the 10-year agreement allows realtors, sellers and buyers to adjust to new rules.
Of course, I don't know what all is in this agreement, however, according to a recently publicized quote from Competition Commissioner Melanie Aitken: "If ratified, the agreement will ensure that consumers have the ability to choose which services they want from a real estate agent when selling their home, and to pay for only those services."
For a flat fee of a few hundred dollars on the listing end, a Realtor® will put your listing on MLS® and will offer the selling realtor anywhere from a couple of thousand dollars down to $1, for selling the property. This then means that the buyers will have to pay their own Realtor's ® commission if they want to buy that property.
Hmmm... I wonder how many Buyers will prefer to look at property being marketed under the traditional model, knowing that the Sellers will be paying commission?
Certainly, Buyers will have to make changes to their budget... in the past, mortgage financing has included commission fees. Buyers were only required to come up with a deposit, a down payment and the usual closing costs and adjustments. Now, they will have to pay extra to have their own representation.
If dealing directly with a Seller, Buyer’s will have to trust that they are receiving full disclosure and will have to be wary of the Seller’s knowledge of the property. Otherwise, Buyers may hope to save costs by seeking out the services of the Seller’s agent... and there will be many more cases of multiple representation- precarious water for the inexperienced. Mistakes in this business are extremely costly.
To sum it up, those Buyers & Sellers who wish to utilize a listing-only service will have to have a fair degree of sophistication and understanding about the real estate process. Most will have to hire other experts and will need to have their lawyer more involved earlier in the process.
Michael Polzler, executive vice president of Re/Max Ontario-Atlantic Canada says, “We at Re/Max do not foresee any significant changes to the real estate landscape. There’s already a lot of options out there from a price perspective. Most people will choose to use a realtor when they sell their home because it’s a complicated transaction that could cost you a lot of money if you make a mistake.”
Why use a Realtor?
The services of a Realtor ® generally include open houses, websites, checking municipal permits over matters such as oil tanks, permits, by-laws, negotiation, disclosure and more- all of it, comfort that Buyers & Sellers have come to expect.
Studies show that 82% of real estate sales are the result of agent contacts through previous clients, referrals, friends, family and personal contacts.
A REALTOR® will generally pre-screen and accompany qualified prospects through your property.
A Realtor® is bound by a strict code of ethics and standards of business practice.
A Realtor ® has been trained. All REALTORS® are graduates of a real estate education program and are committed to pursuing ongoing professional development courses.
A Realtor® understands their fiduciary duties.
A REALTOR® has access to up-to-date information on what is happening in the marketplace and the price, financing, terms and condition of competing properties. These are key factors in getting your real estate goals accomplished, the property purchased or sold at the best price, quickly and with minimum hassle.
Sellers who use the full service package of a REALTOR®, generally, pay no selling costs unless the home sells; if they sell “by owner” they must pay a fee to have their property placed on MLS® and then, extensively advertise with their own money, and without guarantee of sale.
Buyers who use the full package services of a Realtor®, generally, have the costs of their services included in the purchase price, all of which has been determined by the Seller at the time of listing their property.